Mexico reported a stronger than expected rate of growth in the second quarter of the year.
Industrial activity and domestic demand improved over the period and it further shows that the Mexican economy is steadily making progress towards recovery. Data published last week showed a 1.04 per cent increase in GDP in comparison to the first three months of the year. There were also gains in services and industry, which grew at their fastest rate since the third quarter of 2013.
Mexico’s economy has undergone some testing times of late and needed to revise its 2014 growth forecast in May from 3.9 per cent to 2.7 per cent.
This came in response to a drop in consumer spending following a tax increase in the first quarter of the year.
The finance ministry confirmed that despite the second quarter figure being above 0.8 per cent growth forecasts, it would be keeping its overall forecast at 2.7 per cent for the rest of the year. Mexico was also helped by a rebound in the US economy which prompted factory output to grow in response to US demand for Mexican-made goods.
There is much more confidence within the Mexican economy following the positive second quarter performance. President Enrique Pena Nieto stated that these results will help drive annual growth to around five per cent by 2018.
Bill Adams, PNC economist, said in a client note: “If anything, second quarter real GDP was a bit stronger than expected. But more broadly, the second quarter’s solid GDP release reflects the persistent dynamism of the Western Hemisphere’s second largest emerging market.
“Mexico’s skilled workforce and its globally integrated, market-oriented economy are durable sources of national comparative advantage.”
Mexico’s economy grew by 1.1 per cent throughout the entire of 2013.
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